Tough retailing conditions bite landlord Vicinity
Sales of jewellery, leisure goods and services like pharmacies have underpinned earnings at mall owner Vicinity Centres, but tough retailing conditions left the shopping centre landlord with a drop in profits.
Vicinity owns or manages a portfolio of 66 shopping centres, which returned profit of $235.3 million for the half-year to December 31, well below the previous corresponding period’s $755.9 million.
Funds from operations (FFO) - a key industry metric used to determine cash flow - were down 0.9 per cent, to 9.06¢ per security, a result impacted by Vicinity selling multiple higher-yielding but non-core centres over the past 18 months.
Vicinity's planned asset sales saw it offload a dozen malls, netting it $655 million and reducing its debt, in an effort to ring-fence its high-value fortress malls like Victoria's Chadstone and weather Australia's retail storm.
“While FFO per security decreased by 0.9 per cent, adjusting for net acquisitions and divestments, comparable FFO per security growth was 2 per cent,” Vicinity said.
Moving annual turnover - another key metric that calculates total rolling sales for the previous 12 months - grew for the all-important specialty and mini-majors category (stores 600-1500 square metres in size), rising 4.2 per cent.
Jewellery sales rose 12.7 per cent, leisure was up 5.6 per cent, retail services rose 5.2 per cent and apparel and footwear grew 4.2 per cent.
More to come